Despite the continual evolution of the non-asset logistics sector and its growing presence in logistics, there continues to be negative connotations surrounding this model. At the core, the non-asset industry revolves around the concept that these companies don’t own trucks or freight, so other individuals in the logistics industry sometimes have a hard time understanding how these businesses actually operate. We’re here to help debunk some of the common myths surrounding the non-asset logistics industry to try and clear the dirty air surrounding this otherwise thriving and profiting sector.
Myth: Non-asset providers lack direct access to trucks
Truth: While non-asset based brokers don’t actually own any of the trucks that they utilize, this isn’t to say that they don’t have direct access to them. In fact, most non-asset based brokers have tens, if not hundreds, of close relationships with contacts in the trucking industry who provide their trucks to them. These relationships open up direct access to thousands of trucks by creating partnerships with these carriers. As a result of not being asset-based, a non-asset company’s network of trucks tends to be much larger than that of an asset-based logistics company. How can this be? Well, if a trucking company possesses 50 trucks compared to a non-asset broker who may not own any trucks, but who has, on the low end, 20 carrier contacts totaling 5 trucks each, then the connections are there to move cargo effectively despite a non-asset brokerage not physically owning the trucks.
Myth: Non-asset providers bring nothing unique to the table
Truth: Centrally this common criticism of the industry is false. In essence, non-asset based companies profit off the fact that they offer expertise and flexibility to their customers. Non-asset based providers are there to benefit their client in a unique way. Because different clients have varying priorities in terms of their operations and necessities, not all of these companies will have the same needs.
Non-asset based companies provide their proficient knowledge in a wide area of skills – from negotiating agreements with carriers to preserving carrier relationships with warehouses and distribution centers. With all of this expertise offered, non-asset companies tend to only have one goal in mind: Satisfying their customers by helping them to manage their supply chain at the most-economical yet convenient price to his or her company.
Myth: Non-asset providers have less control than asset-based companies
Truth: It’s easy to understand where this myth comes from. It’s oftentimes assumed that because non-asset providers don’t actually own any of their trucks, then they, in fact, have less or even no control of their operations. However, this is far from the truth. In fact, most freight brokers actually set in place company policies relating to compliance and performance that they require their carriers to commit to following. Non-asset providers are required by law by the Federal Motor Carrier Safety Administration (FMCSA) to perform their due diligence on every carrier that they work with. This involves a wide range of aspects, such as guaranteeing that their drivers are insured, that their vehicles meet safety standards and that they are upholding high service levels, such as being in compliance with estimated pick-up and delivery times.
Non-asset brokers also have the advantage when it comes to when companies have issues with their current freight base. For example, last year during the inclement Polar Vortex non-asset based logistics companies fared much better than asset-based. Non-asset providers had the ability to reach out to their wide array of contacts in the less temperate areas, whereas asset-based providers were left scrambling. When it comes to weather or traffic delays and equipment malfunctions, non-asset providers have the advantage in control.
Many shippers are reluctant to use non-asset logistics companies, not because they are ineffective, but rather because they don’t have a clear understanding of how the sector operates. However, after debunking three common yet false misconceptions of the non-asset brokerage industry, shippers can be on their way to becoming better informed. As the perception of the non-asset brokerage logistics industry begins to change, this sector can continue to prosper as more shippers put their trust in these experts. After all, utilizing a trusted logistics system can leave shippers to focus on their core competencies while leaving non-asset brokers to do what they do best – relieve shippers of strenuous supply chain duties.